Valuentum Exclusive Analysis for the Discerning Investor

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Oct 28, 2020

We’re Still Huge Fans of Microsoft
Image Shown: A snapshot of Microsoft Corporation’s first quarter fiscal 2021 performance. We continue to be huge fans of the cash-rich tech giant. Image Source: Microsoft Corporation – First Quarter Fiscal 2021 IR PowerPoint Presentation. On October 27, Microsoft Corp reported first quarter fiscal 2021 earnings (period ended September 30, 2020) that blew past both consensus top- and bottom-line estimates. Its GAAP revenues were up 12% year-over-year, hitting $37.2 billion, while its GAAP diluted EPS jumped 32% higher on a year-over-year basis, hitting $1.82 last fiscal quarter. Leading the charge was Microsoft’s cloud-computing Azure segment, which reported 48% year-over-year sales growth, and its Dynamics 365 segment (includes offerings that meet enterprise resource planning and customer relationship management applications needs), which reported 38% year-over-year sales growth last fiscal quarter. Almost all of Microsoft’s various business segments reported impressive performance last fiscal quarter. Microsoft is firing on all cylinders and we continue to be huge fans of the name. We include shares of Microsoft as a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios.

Sep 15, 2020

Microsoft Boosts Its Dividend and Announces a New Strategic Partnership
Image Shown: Shares of Microsoft Corporation are up significantly year-to-date as of this writing, and we see room for further capital appreciation upside. Shares of Microsoft are included as a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. On September 15, Best Ideas Newsletter and Dividend Growth Newsletter portfolio holding Microsoft announced a ~10% sequential increase in its quarterly per share dividend, boosting its payout up to $0.56 per share or $2.24 per share on an annualized basis. As of this writing, shares of MSFT now yield ~1.1% on a forward-looking basis. Furthermore, Microsoft noted its 2020 Annual Shareholders Meeting would be held on December 2 and would be conducted through a virtual format.

Sep 1, 2020

Valuentum Website Overview
Overview of the key features of www.valuentum.com (03:55). Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports, dividend reports, and ETF reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information.

Aug 4, 2020

Apple Surges Higher Ahead of Stock Split
Image Shown: Shares of Apple Inc have staged an impressive rally since bouncing off their March 2020 lows, with AAPL up ~46% year-to-date as of this writing on August 3. We added shares of Apple back to the Best Ideas Newsletter and Dividend Growth Newsletter portfolios on June 12, 2020. Later on this August, Apple intends on completing a four-for-one stock split. We added Apple back to both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios on June 12, 2020 (link here). Companies that are supported by secular growth tailwinds and pristine balance sheets, such as Apple, are well-positioned to deal with the ongoing coronavirus (‘COVID-19’) pandemic. Shares of AAPL have surged significantly higher since mid-June and are now trading well above the top end of our fair value range as of this writing, but we want to stress here that we like to let our winners run. It is not until after a firm’s technicals turn against it that we would consider removing shares of that firm from our newsletter portfolios. Given its stellar third quarter fiscal 2020 earnings report (period ended June 27, 2020) published on July 27, shares of Apple may have room to run further still.

Jul 31, 2020

Our Judgment for the Long Haul
As you're probably aware by now, Apple, Alphabet, and Facebook--key positions in the newsletter portfolios--put up monster second-quarter results July 30, respectively. We'll be addressing the quarterly reports more in depth on our website in the coming days, but Apple is now a ~$410 per share stock, trading up 6%+ on the session, and now Facebook is trading over $250, up 7%+ on the session. Now at all-time highs, Facebook has been one of the top weightings in the Best Ideas Newsletter portfolio for some time. Its poor performance during 2018 is now history! Alphabet, while facing some weakness today, hit all-time highs earlier this month.

Jul 23, 2020

Microsoft Closes Out Fiscal 2020
Image Shown: An overview of Microsoft Corporation’s financial performance during the fourth quarter of fiscal 2020. The company reported strong year-over-year revenue growth across its three main business segments. Image Source: Microsoft Corporation – Fourth Quarter Fiscal 2020 Earnings PowerPoint Presentation. On June 12, 2020, we added Microsoft Corp back to the Best Ideas Newsletter and the Dividend Growth Newsletter portfolios. We strongly appreciate Microsoft’s net cash position, high quality cash flow profile, and its long-term outlook, which is underpinned by secular growth tailwinds. On July 22, Microsoft posted fourth quarter fiscal 2020 (period ended June 30, 2020) that beat both consensus top- and bottom-line estimates, though its guidance for the current fiscal quarter was lighter than what analysts had expected. The top end of our fair value estimate range for Microsoft sits at $234 per share, indicating shares of MSFT have room to run further still after climbing ~34% year-to-date as of the end of normal trading hours on July 22 (before taking dividend considerations into account). Additionally, we give Microsoft “EXCELLENT” Dividend Growth and Dividend Safety ratings due to its promising payout growth outlook and stellar Dividend Cushion ratio of 3.9 (which factors in annual double-digit per share dividend increases over the coming fiscal years). Shares of MSFT yield ~1.0% as of this writing.

Jul 9, 2020

Update on Valuentum's Research
The markets, especially the NASDAQ, have been powering ahead, and we maintain our bullish long-term stance on equities. As you're well aware, the stock market is not the economy, and stocks are long-duration financial instruments (i.e. forecasts about the long term impact the price today). Fed and Treasury actions have inflated the longer-duration components of intrinsic value, more than offsetting in most cases the implications of a weak economy/earnings in the near term.

Jun 16, 2020

Reiterating Our Bullish Long-Term View on Stocks
Image: The NASDAQ 100 Index remains resilient, bouncing off support, after breaking out to new highs recently. Some of our best ideas are included in the NASDAQ 100, and our favorite concentrations include exposure to big cap tech and large cap growth. We continue to be bullish on equities for the long run. In addition to unlimited quantitative easing and "whatever it takes, squared" Fed policy, today, June 16, the Trump administration announced that it is weighing a $1 trillion stimulus bill to help support the economy. While uncertainties remain regarding specifics of the bill (it might include state assistance, extension of unemployment benefits, etc.), the move is consistent with the outsize spending we expect to further bolster the bull case, "ICYMI -- Stay Optimistic. Stay Bullish. I Am." We continue to emphasize that, in light of unlimited QE and runaway fiscal stimulus, the longer-duration components of intrinsic values are expanding considerably, and as a result, fair values, themselves, are actually rising during this recession and pandemic [a good estimate of the value of the S&P 500 today may be between 3,530-3,920, as outlined in the following: "Scribbles and More Newsletter Portfolio Changes.]."

Jun 15, 2020

ICYMI: Survey Coming Later Today, More Market Volatility Expected
Image: The market's levels of volatility so far in 2020 have been among the greatest in history. Expectations for increased volatility in the marketplace as a result of the proliferation of price-agnostic trading (indexing and quantitative trading) is a key theme of Valuentum's text, Value Trap: Theory of Universal Valuation. We continue to emphasize the importance of due diligence, enterprise valuation, behavioral thinking, the information contained in prices, and stock selection across equity portfolios. Page 256. This week is setting up to be yet another volatile week of trading, but nothing too surprising. We've talked extensively about outsize levels of volatility in the book Value Trap, and many of our predictions regarding the magnitude of volatility have come to fruition, as described in this note here. But as we've also noted in Value Trap, we don't think increased volatility is a transient development. The Fed and Treasury have only further emboldened price-agnostic trading (indexing/quant) with recent bailout actions, and volatility and momentum funds, which exacerbate the swings, will only grow as a percentage of trading volumes. The magnitude of market volatility during the COVID-19 crisis has certainly been immense. During March for example, the Dow Jones Industrial Average had 8 consecutive days with a 4% move in either direction (this is the first time in history this happened--not even during the tumultuous times of the Crash of 1929 or Black Monday of 1987 or the Great Financial Crisis did this happen). Intra-day volatility has also been considerable, and it has become commonplace for equity futures to swing wildly before market open. Now, more than ever, investors need a steady hand at the wheel.

Jun 12, 2020

*ALERT* Scribbles and More Newsletter Portfolio Changes
Image: Why are stock prices increasing while the near-term economy and near-term earnings outlook isn't as bright as before...How unlimited quantitative easing, runaway government spending, increased inflation expectations impact equity values...Why this year's earnings expectations or next year's earnings expectations don't matter much...Why Valuentum thinks equity values are rising today, even as the near-term outlook remains unclear. Scribbles on page 76 of Value Trap. "I know it sounds crazy to say so during a global pandemic and during a recession, but the right multiple and the right earnings to use to value this market is an 18-20x multiple on $196 earnings, putting a fair value range on the S&P 500 today of 3,530-3,920. The S&P 500 is trading at about 3,000 today." -- Brian Nelson, CFA